Fed and ECB monetary policy courses are contributing to EURUSD decline

20 March 2024 63
Fed and ECB monetary policy courses are contributing to EURUSD decline

EURUSD has slowed its downward movement as investors refrain from active trading ahead of the Federal Reserve's policy announcement.

 

The FOMC statement is in the spotlight today, followed by a press conference held by Fed Chairman Jerome Powell. Market participants are not expecting changes in the regulator's rates, but are looking for clues on the economic outlook and possible monetary policy adjustments in the near future.

 

Last week, the US Consumer Price Index and Producer Price Index came in above forecasts. These statistics reduced expectations of a near-term interest rate cut by the Fed. Traders estimate the probability of such a move in June at 61%, according to the CME FedWatch tool.

 

Meanwhile, the European Central Bank's (ECB) policymakers have started to raise the issue of rate cuts more decisively. Most public comments from ECB officials suggest that the first step in this direction will be taken in June.

 

Last week, at least nine representatives of the ECB's Executive Board and Governing Council said that June would be a good time to assess eurozone economic data. This was announced by the regulator's chief economist, Philip Lane, and Vice President, Luis de Guindos, as well as the heads of central banks in several European countries, including Klaas Knot and Pablo Hernández de Cos. The European regulator's resolve is driving down the value of the region's single currency.

 

EURUSD quotes have broken above the uptrend in the H4 timeframe.

 

In terms of wave analysis, the price is currently forming the third bearish wave on the H1 timeframe. The first wave top at 1.0770 has already been broken through. This indicates a potential strengthening of the downward momentum. The Relative Strength Index (standard readings) has left the overbought zone, suggesting that the EURUSD may fall in the near future.

 

Signal:

Short-term prospects for EURUSD suggest selling

The target is at the level of 1.0760.

Part of the profit should be taken near the level of 1.0830.

A stop-loss could be placed at the level of 1.0930.

 

The bearish trend is short-term, so trade volume should not exceed 2% of your balance.

This content is for informational purposes only and is not intended to be investing advice.

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